The firm has made several recommendations on how organisations can adapt existing operating and service models
Exclusive: Insurance firms must treat social media with the same due diligence as other communication channels amid the FCA’s new Consumer Duty rules, warns the latest report from Davies Group.
Social media is fast becoming the preferred channel for consumer communication. The report, titled The FCA’s New Consumer Duty: Unpacking the role of Unstructured Consumer Feedback in Next-Gen Supervisory Data, noted that in today’s digital-first world, the expectation is that social media will continue to grow for consumers.
For example, it said consumers using digital platforms including social media had tripled between 2017 and 2020.
“As such, organisations will need to treat these platforms with the same level of due diligence as they do their call centres and physical branches,” the report said.
It added that the bulk of the conversations around conduct related complaints related to consumer support and products and services.
But for Davies Group, the new Consumer Duty rules are “step in the right direction” to ensure that good customer outcomes are the long-term interest in insurance.
“It is important not only for businesses to remain updated as to its potential roll-out, but also conduct proactive audits across all channels, including social media, to ensure that the standards of their customer communications, customer service and product positioning are in line with the proposed Consumer Duty ahead of new FCA announcements,” the report continued.
“Positioning data driven insight and action at the centre and activating AI wherever possible will be critical as we move from ecommerce and the experience economy and enter the era of the intuitive and dynamic experience ecosystem.”
Consumer Duty (principle 12) is a new principle from the regulator that hinges on the overarching standard of conduct that “a firm must act to deliver good outcomes for retail customers” throughout the entire product life cycle.
It seeks to achieve four desired outcomes, including products ad services, price and value, consumer understanding and consumer support.
It replaces principle six, treating customers fairly, and principle seven, customer communication.
The report recommends that organisations need to adapt existing operating and service models quickly, this includes:
- Customer personalisation: A highly personalised approach to customer experience will continue to move away from traditional sales and service models to customised, contextually positioned and intuitively driven advice-based experiences. This will feel far more interactive and dynamic to consumers but requires increased effort from the organisations’ connected delivery models.
- Reimagine connected contact models: Customers will increasingly define their own personal preferences to contact type based on convenience and personal risk (health and financial), so providing the right access points and appropriate protection will be crucial.
- Review product governance against value-based outcomes: To prepare for the new Consumer Duty, organisations should start to consider how operating and service models will need to adapt, including redesigning customer journeys, re-imagining contact strategies, refocusing and rebalancing the workforce and reviewing reporting and governance practices to be value and outcome based.
- Refocus the hybrid workforce: As organisations continue to harmonise the human and automated workforce it should ensure that the most appropriate handling type is used for customers based on the required outcome, rather than simply the most efficient for the business.